Coverage Initiated on 'One of the Most Undervalued Biotech Companies in Canada'Research Report

Source: Streetwise Reports (12/6/17)

David Kideckel, an analyst with Beacon Securities Ltd., explained the investment thesis for this clinical-stage life sciences firm.

In a Nov. 15, 2017, research report, Beacon Securities Ltd. analyst David Kideckel described Resverlogix Corp. (RVX:TSX) as a company with "a game-changing medical technology platform and drug development platform," and "a deeply talented senior management team." He stated, "We believe that Resverlogix is one of the most undervalued and most impressive biotechnology companies listed on the Toronto Stock Exchange. . .[it] has flown under the radar of 'healthcare and biotechnology-focused' investment banks, which is unfortunate (or fortunate for future investors), given the company's blockbuster market potential."

Beacon initiated coverage on Resverlogix with a Buy rating and a CA$8.55 target price derived from the risk-adjusted net present value of its two initial target indications, cardiovascular disease and chronic kidney disease, Kideckel explained. The stock is currently trading at around $1.62.

Resverlogix's epigenetics drug development platform is based on targeting bromodomain and extra-terminal (BET) proteins, and its lead drug candidate, apabetalone (RVX-208), is one such inhibitor. With its platform, the company is addressing epigenetics and BET inhibition, which, wrote Kideckel, "are among the hottest fields in the global biotechnology sector with significant upside potential."

Three clinical trials are underway involving apabetalone. The first is a Phase 3 study (BETonMACE) for the secondary prevention of major adverse cardiovascular events (MACE) in high-risk patients with diabetes. The second is a Phase 2 study in chronic kidney disease, and the third is a Phase 2 trial in Fabry Disease (a rare disease).

What really excites Kideckel about Resverlogix is its recent R&D program in Complement biology. Resverlogix recently published data indicating that the Complement system is the top downregulated pathway in Apabetalone-treated (its lead drug candidate) human liver cells. Kideckel told Streetwise Reports, "Complement is one of the hottest areas in global biotech. The leading Complement company in the world, US-based Alexion Pharmaceuticals (ALXN.O), generated USD$2.8b in 2016 annual sales alone with its blockbuster drug, SOLIRIS®, a Complement-inhibitor."

Beacon estimated Resverlogix may need up to ~CA$60M over the next 18 to 24 months to advance its clinical and research and development programs. It "may also form a partnership with another big pharma company to license its proprietary technology," suggested Kideckel.

The analyst indicated, too, that Resverlogix is a prime takeout target. It is furthest ahead with its platform, among the firms pursuing BET inhibition, he said. It is the only company globally that is actively pursuing BET in cardiovascular and chronic kidney diseases and that has "potential numerous other applications in various disease states," Kideckel added. To date, no BET inhibitor has been approved for use anywhere in the world.

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Additional disclosures about the sources cited in this article

Beacon Securities Ltd., Resverlogix Corp., Nov. 15, 2017

Does Beacon, or its affiliates or analysts collectively, beneficially own 1% or more of any class of the issuer's equity securities?No

Does the analyst who prepared this research report have a position, either long or short, in any of the issuer’s securities? No

Does Beacon Securities beneficially own more than 1% of equity securities of the issuer? No

Has any director, partner, or officer of Beacon Securities, or the analyst involved in the preparation of the research report, received remuneration for any services provided to the securities issuer during the preceding 12 months? No

Has Beacon Securities performed investment banking services in the past 12 months and received compensation for investment banking services for this issuer in the past 12 months? No

Was the analyst who prepared this research report compensated from revenues generated solely by the Beacon Securities Investment Banking Department? No

Does any director, officer, or employee of Beacon Securities serve as a director, officer, or in any advisory capacity to the issuer? No

Are there any material conflicts of interest with Beacon Securities or the analyst who prepared the report and the issuer? No

Is Beacon Securities a market maker in the equity of the issuer? No

Has the analyst visited the head office of the issuer and viewed its operations in a limited context? Yes

Did the issuer pay for or reimburse the analyst for the travel expenses? No

Beacon analysts are not permitted to own the securities they cover, but are permitted to have a position, either long or short, in securities covered by other members of the research team, subject to blackout conditions.

Analyst Certification: The Beacon Securities Analyst named on the report hereby certifies that the recommendations and/or opinions expressed herein accurately reflect such research analyst’s personal views about the company and securities that are the subject of the report; or any other companies mentioned in the report that are also covered by the named analyst. In addition, no part of the research analyst’s compensation is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

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